Plan for new Vancouver Art Gallery still faces significant hurdles

Vancouver Art Gallery Director Kathleen Bartels and VAG board of trustees chair Bruce Munro Wright stand in front of a part of artist Ian Wallace’s exhibition “at the Intersection of painting and photography” in the gallery.

Photograph by: Les Bazso
, VANCOUVER SUN

Vancouver Art Gallery leadership believe they have met the criteria necessary to gain city approval for the building of a new, stand-alone gallery on public land. However, the plan still faces significant hurdles and opposition from critics.

A confidential business plan for the project has found that the new proposed gallery would be operationally viable, and could financially support itself on its current funding model.

The business plan, prepared by Lord Cultural Resources and contained in a report obtained by The Vancouver Sun, was does not deal with how VAG would raise the $300 million needed to build its new home but instead looks at post-construction operations.

The report recommends caution on what the VAG must do in order to avoid the pitfalls of other major North American art institutions that expanded and then found themselves in financial trouble. Chief among them are to not overestimate both revenue and the expected number of visitors to the new gallery.

The report is the kicker in an argument the VAG hopes to settle next month over whether the city should give it title to a portion of Larwill Park, a city-owned block bordered by Cambie, Dunsmuir, Beatty and Georgia streets. The three-acre parcel, of which the VAG is proposing to take two acres, is currently a parking lot and the last undeveloped block of city land downtown.

In 2011 the city agreed to give VAG two years to meet a number of conditions before it would make a decision on the site — it was told to develop a solid business plan, prove that it has the financial ability to successfully raise the required capital and operating costs, examine other locations, and demonstrate broad public support.

The city also wanted evidence of how it would recover a $40 million encumbrance it already has against the land for improvements made to the adjacent city-owned Queen Elizabeth Theatre.

VAG director Kathleen Bartels says the Lord report answers the city’s concerns about a business case. She also says that the gallery has demonstrated that the project has broad public support, and that no other suitable site exists. In 2010 VAG mounted a broad public campaign, convincing the arts community to lobby city council for the gallery’s moral right to the site. But Bartels acknowledged VAG hasn’t yet been able to show that it can successfully fundraise the capital costs, adding that it can’t begin its campaign yet because it doesn’t have title to the property.

“That is part of the process, because what we need is to have the site to be able to go out and fundraise and start approaching government,” she said. “Right now we’re just talking about an idea, a theory, instead of something actually concrete.”

Bartels said she told the city of this hurdle and is confident it isn’t an obstacle to council’s approval. But even if the city gives VAG title to the land, it will be many years before a new gallery can be built, she said.

Architectural plans will have to be drawn up in the first year, after which VAG would then approach the provincial and federal governments and tap into corporate and private donor support.

“I think a year is much too short. I think it is a phase where we can do much of our planning of the conceptual design but we can’t go aggressively publicly until we have that in place,” she said. “We’re looking at a seven to eight year process between when we can get the site and are able to open a building.”

City council is expected to make a decision in mid-February, based on the business report, staff recommendations and consultation with Canada’s diverse arts and philanthropy communities.

But the proposed move is a divisive issue, with some critics, such as real estate expert Bob Rennie, who is also an avid art collector, saying it is too big a capital project for Vancouver and would likely be an an ongoing drain on corporate givers and taxpayers.

VAG wants to build a 320,000-square-foot gallery, and would look to the city to donate the value of the Larwill Park site as its contribution to the project. Rennie estimates the city’s contribution alone is worth more than $200 million, which would make the VAG project a half-billion dollar investment.

More than two years ago, VAG received a $50 million grant from the province and announced it also had $40 million in pledges for the construction fund. So far the federal government has been silent on whether it would help, and VAG says it has not yet tapped further into corporate and philanthropic circles for the rest of the necessary capital.

A week ago City Manager Penny Ballem held a closed-door meeting attended by a roster of Canadian art and philanthropy experts to consider whether VAG’s proposal is sound.

Among those were Mark Mayer, director of the National Art Gallery; Matthew Teitlebaum, director of the Art Gallery of Ontario; Paul Shimmel, formerly of Los Angeles Museum of Contemporary Art; Gordon Harris, of the BC Arts Council, Vancouver art collector Andrew Gruft; and Rennie, who is also the chairman of the North American acquisitions committee for Britain’s Tate Modern gallery. Also attending were Bartels and Bruce Munro Wright, VAG’s board of trustees chairman.

According to those who were at the meeting there was a general view that the city should allow VAG to see what it could do to raise the necessary construction funds. Bartels, without revealing what was discussed, said she was pleased with the meeting and feels the outcome of VAG’s request will be positive.

But Rennie, who was not shown The Sun’s copy of the VAG business plan, said he worries that the gallery plan is too ambitious and will suck the city’s limited philanthropic community dry. And he estimated the city’s contribution would exceed more than $202 million, based on the $87 million value of the land, as well as foregone community amenity contributions and property taxes in perpetuity, costed out at present-day values.

“My concern is that we are in a new economy, money is not as plentiful, the philanthropic pool is limited, corporate giving is limited, and let’s be very careful that one doesn’t survive at the risk of all others. All arts and culture organizations in this city are on a shoestring,” Rennie said.

“I think there needs to be a public discussion about this. If you have $200 million worth of (city) value, should it go into a half-billion dollar museum, and can it handle it? Do we need that big a monument? I don’t know if we are entitled to the display walls of Chicago and New York when we don’t have that level of philanthropy.”

Bartels said she understands Rennie’s criticism but believes there is a deep well of corporate support for VAG. A feasibility study done several years ago showed at least $100 million could be raised from the private sector, she said.

But since then an aging Michael Audain, one of the largest art benefactors in Vancouver, announced he was moving his expansive collection — once previously believed to be destined for VAG — to a new gallery he is helping to build in Whistler.

Bartels said Audain remains an adviser to VAG and that “the last chapter” hasn’t been written on whether some of his collection will come back to the gallery. But she believes the city is ready to give the gallery a chance, and that makes all the difference in the art world.

“We feel it will go very positively,” Bartels said. “We have been working very closely with the city over the last two years to make sure we are meeting all of the objectives set out by (council). I would be very surprised if we don’t have a positive outcome.”

The Lord report, which has been in the possession of city staff since at least September, 2012, is relatively silent on the issue of how much corporate support VAG will need if it goes ahead. The report says VAG has a financially sound operations plan and it lays out a conservative roadmap for how the gallery would operate in the new facility, basing a budget on modest gains in attendance and other revenues. But it also notes that the gallery’s endowment fund, currently about $11 million, would have to be bolstered with another $50 million to generate the annual payments necessary to meet its budget projections.

The report says without raising the relatively low level of government support VAG now gets, it would have a $386,000 deficit in the first year, escalating to $1.4 million in year three. It notes the gallery gets less than 25 per cent of its revenue from government support, compared to a national average of 47.8 per cent, based on a survey of 39 other public museums and art galleries in Canada.

“It is important to note that the additional financial requirements to support the operation will need to be addressed primarily through the continued growth in the VAG’s private sector fundraising,” the report’s authors say.

Bartels said the report clearly shows the gallery can financially afford to operate in a new facility at Larwill Park based on its current funding model. VAG’s private sector support is strong enough to cover those projected shortfalls, she maintained, and said the gallery is undertaking another study looking at the growth in private sector fundraising of institutions.

“We will more than surpass this number here,” she said, referring to the deficit figures. “This is a very positive report.”

The Lord report says VAG projects modest growth in attendance, up from 260,000 visitors per year now to about 380,000 in the second year. It says that in the first year of opening attendance would likely be closer to 450,000 because of public curiosity, and would escalate to 475,000 in years when VAG offers “blockbuster” exhibits, such as the recent Monet exhibit, for which extra admission charges are levied. It also says VAG doesn’t intend to raise admission fees, and would limit the number of extra staff it would need to hire.

As a result, VAG would see its operating budget, currently about $12.4 million, rise to about $20 million in each of the first two years, and hit about $22.6 million in year 3, the first year for a planned “blockbuster” exhibit. The report notes VAG far exceeds the national average for on-site attendance, memberships and revenue from admissions. Private endowment support for VAG is nearly double the national average.

As a result, the Lord report says, VAG enjoys a relatively strong financial position. It projects that the annual “earned and contributed income” the gallery gets from memberships, private and corporate fundraising would more than double by the third year from its current level of $6.4 million. It also spends less on staff salaries as a percentage of operating costs than other museums and galleries in North America.

The gallery has only occasionally run deficits in its 82-year history, including in 2011 when it had an $800,000 shortfall. Last year it declared a $346,000 profit.

Bartels said VAG has already witnessed attendance records exceeding those projected in the Lord report, and it has carefully considered the experiences of other museums that expanded.

Coun. Heather Deal said the city has already accepted VAG’s argument that its current location in the former courthouse at Robson Square is too limiting and that it needs more space. But she didn’t want to comment on whether that means the city will give VAG the Larwill Park land outright, or whether it can both afford to build the new gallery on the city’s site and properly fund ongoing operations. She said council is awaiting the staff report and had not been briefed further on the matter.

Vancouver Art Gallery Director Kathleen Bartels and VAG board of trustees chair Bruce Munro Wright stand in front of a part of artist Ian Wallace’s exhibition “at the Intersection of painting and photography” in the gallery.

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